Top 250 Franchise by Entrepreneur – Rank no. 33 – GNC Franchising – US
Products & Services: Vitamin & nutrition store
Number of Locations: 6,146
Total Investment: $167.64K – 281.35K
Began Franchising: 1988
About GNC Franchising
In 1935, David Shakarian started a health-food store in Pittsburgh called Lackzoom. It specialized in yogurt (which his father had helped introduce to the U.S.), but also carried health-food products such as honey and grains. Beginning with $35 in receipts his first day, Shakarian expanded to six Pittsburgh-area stores in five years.
As more people became interested in natural foods and better nutrition, Shakarian opened stores in other states and changed the company’s name to General Nutrition Centers (GNC). GNC also began producing its own vitamin and mineral supplements, foods, drinks and cosmetics. They started franchising in 1988. With company and franchised stores throughout the U.S. and worldwide, GNC now focuses on vitamins and nutritional supplements.
Startup Costs, Ongoing Fees and Financing
Franchise Fee: $40,000
Ongoing Royalty Fee: 6%
Term of Franchise Agreement: 10 years, renewable
Net Worth: $150,000 – $200,000
Liquid Cash Available: $85,000 – $100,000
39% of all franchisees own more than one unit. Number of employees needed to run franchised unit: 3 – 4. Absentee ownership of franchise is NOT allowed. (100% of current franchisees are owner/operators).
|FINANCING TYPE||IN-HOUSE||THIRD PARTY|
How This Franchise Supports Franchisees
Franchise Ranking History
|Traded as||NYSE: GNC|
|Headquarters||Pittsburgh, Pennsylvania, U.S.|
|Number of locations||7,334 (March 2011)|
|Key people||Joseph Fortunato, CEO|
|Revenue||$2.07 billion (2011)|
|Owner(s)||Ontario Teachers’ Pension Plan,Ares Management|
General Nutrition Corporation (GNC) is a Pittsburgh, Pennsylvania-based American commercial enterprise focused on the retail sale of health and nutrition related products, including vitamins, supplements, minerals, herbs, sports nutrition, diet, and energy products.
In 1935, David Shakarian opened a small health food store, Lackzoom, in downtown Pittsburgh. He only made USD $35 on his first day, but was able to open a second store within six months. A year later, Shakarian suffered from what appeared to be a fatal blow when the Ohio River flooded on St. Patrick’s Day. Both of his stores were wiped out. However, he quickly rebuilt both stores, and opened five more by 1941. The company officially registered as a corporation on September 1, 1936  Shakarian moved into the mail order business during WWII. He said that customers sent him a check and asked him to mail their product as they could not drive to his store due to the gas rationing which happened during WWII. He created a company called Natural Sales which was his mail order division. Natural Sales company flourished for many years until it was sold to Natures Bounty (NBTY).
During the health food craze of the 1960s, Shakarian expanded his chain outside Pittsburgh for the first time, and in the process changed its name to General Nutrition Center. He continued to run the chain until his death in 1984. Shakarian took GNC public (listed on the NYSE)in the 1980’s. Overexpansion and his death in 1984 resulted in a highly leveraged GNC. The Shakarian family decided to sell GNC shortly after his death. The family brought in a “turn around” executive, Jerry Horn, with instructions to “stop thee bleeding” and position GNC to be sold. GNC was taken private and sold to The Thomas Lee Company, a PE investment/management fund. Thomas Lee ran GNC and took it public prior to selling the company to Royal Dutch Numico and p Numico acquired GNC in 1999; it sold GNC to Apollo Management in 2003. Ontario Teachers’ Pension Plan and Ares Managementbought GNC in 2007. GNC went public in 2011.
GNC stores typically stock a wide range of weight loss, bodybuilding, nutritional supplements, vitamins, natural remedies, and health and beauty products, in both its owned brands as well as third-party brands. The stores also sell health and fitness books and magazines.
GNC has over 6,000 stores in the U.S., including 1,100 store-within-a-store locations within Rite Aid, as well as locations in 49 other countries.In addition, GNC LiveWell currently has 41 Stores located in Brisbane, Sydney, and Melbourne in Australia.
GNC retail stores are both a combination of corporate-owned and franchised stores; 950 of the 5,000 domestic US stores are franchises, commonly located within urban shopping malls and shopping zones. In addition to the GNC.com website, GNC’s products are sold on drugstore.com.
Awards & recognition
Six formulas of GNC-branded multivitamins were tested by ConsumerLab.com in its Multivitamin and Multimineral Supplements Review of 38 of the leading multivitamin/multimineral products sold in the U.S. and Canada. All six formulas passed ConsumerLab’s test, which included testing of selected index elements, their ability to disintegrate in solution per United States Pharmacopeia guidelines, lead contamination threshold set in California Proposition 65, and meeting U.S. Food and Drug Administration (FDA) labeling requirements.
In 1998, GNC was accused of purposely running its franchisees out of business in order to “retake” the stores into corporate control. An April 30, 2003 article states that the GNC corporate company was sued by numerous franchise owners. The complaint is that the parent company was allowing their corporate owned stores to sell products for less than the franchise stores are allowed to sell them for. The suit also claimed that GNC charged high “reset fees” to franchisees when there is new signage that needs to be changed in the store or an image facelift that must be done by GNC corporate. A similar lawsuit was filed again in an article written on October 20, 2004.